Could the Knicks Be an Activist Play at Madison Square Garden?

Hedge fund JAT Capital Management LP filed an activist position in Madison Square Garden Co.MSG +1.55% with the SEC late on Friday night, disclosing it owns a 6.7% stake in the Class A shares.

That would be enough to make them a top 3 player in the stock, according to FactSet.

JAT, which has never filed an activist position before and therefore isn’t likely to fight a public campaign, doesn’t give any hint at what its thesis is or what it would seek. The filing says it will seek “constructive” talks with management to achieve “long-term value.”

But Gordon Haskett’s event-driven research notes there’s been a lot of talk recently about a jump ball for your New York Knicks.

The idea of prying the Knicks out of the hands of Madison Square Garden is not just a dream for Knicks fans, who are championship-less since 1973 and often yell they want a new owner. (Good luck, new head coach Derek Fisher.)

Investors have been hoping for a sale, too.

When Steve Ballmer agreed to buy the L.A. Clippers for $2 billion earlier this year, shares of MSG jumped higher as many believe the Knicks would be worth more than a team that shares the stage with the Lakers.

“If L.A’s ‘second’ team is worth $2bn, an argument can be made that the Knicks are worth considerably more and that plays favorably into a MSG sum-of-the-parts story,” Gordon Haskett wrote Monday.

One estimate put the Knicks value at $3 billion, which would account for 3/5 of MSG’s total market cap at this point. (MSG also owns the New York Rangers, the WNBA’s New York Liberty and the MSG television networks.)

Still, anyone trying to get the Knicks sold would have to get through the Dolan defense. The family, with James Dolan running the show as executive chairman, controls 69% of the voting power at MSG thanks to the Class B shares. So despite all the noise from fans and media speculation and lack of championships, the Knicks are still owned by MSG.